2019 Interim Results Performance to Date Broadly in Line with Board Expectations
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Merlin Entertainments plc – 2019 Interim Results Performance to date broadly in line with Board expectations 1 August 2019 Merlin Entertainments, Europe’s leading and the world’s second-largest visitor attraction operator, today reports results for the 26 weeks ended 29 June 2019. Key highlights 26 weeks 26 weeks ended ended Organic Reported 29 June 30 June growth growth 2019 2018 (constant (actual (restated) currency)(2) currency) Visitors(1) (m) 30.8 29.9 3.0% Revenue (£m) 763 706 6.5% 8.1% Underlying EBITDA (£m) 191 188 (0.8)% 1.4% Underlying operating profit (£m) 79 88 (14.2)% (10.8)% Underlying profit before tax (£m) 34 43 (21.6)% Underlying profit for the period (£m) 25 33 (24.4)% Adjusted earnings per share (p) 2.5 3.3 (24.7)% Dividend per share (p) - 2.5 n/a Operating free cash flow (£m) 110 107 2.4% • During the period the Group adopted IFRS 16, the new accounting standard for leasing. The 2018 results have therefore been restated compared to previously reported figures to be on an IFRS 16 basis. • During the period the Group disposed of its two Australian ski resorts. These have been accounted for as discontinued operations in both periods and accordingly the results above relate to the continuing operations of the Group excluding the ski fields. • To aid understanding of these items, a reconciliation to previously reported numbers is shown on page 12. Summary • Group organic revenue grew by 6.5%, driven by like for like revenue growth of 2.3% as Midway Attractions and Resort Theme Parks return to growth, and the continued roll out of new attractions and accommodation; • Midway Attractions organic revenue grew by 8.1%, with a steady recovery in London trading and growth elsewhere; • Resort Theme Parks organic revenue growth of 4.1% driven by product investment, accommodation openings and favourable trading at Easter; • LEGOLAND Parks organic revenue increased by 4.6% with continued accommodation openings offsetting challenging trading in the existing estate; • Accommodation revenue grew by 14.5% on a constant currency basis and now represents 24% of theme park revenue; • Significant cost pressures, partially mitigated by the Productivity Agenda, have limited EBITDA growth; • Increased depreciation charge relating to the significant investment in the business, and an increased tax charge due to US legislation, combined with the operating performance, resulted in a 24.7% decline in adjusted earnings per share; • Improved cash generation, with operating free cash flow of £110 million, representing growth of 2.4%; • No dividend proposed, following the 28 June announcement regarding the Recommended Offer; • Continued focus upon long term investment opportunities, with progress against the opening of new LEGOLAND parks and roll out of new brands. 1 Nick Varney, Chief Executive Officer, said: “Group performance year to date has been broadly in line with our expectations in the seasonally quieter first half of the year, with 6.5% organic revenue growth driven by a combination of like for like growth, continued contribution from new openings and the benefit of a diversified portfolio. After a number of years of headwinds, it is pleasing to see both Midway and Resort Theme Parks (RTP) returning to better levels of like for like revenue growth, with improved cash generation. In Midway, we have seen an improvement in London trading and a generally solid performance elsewhere driving 4.5% like for like revenue growth, whilst RTP has delivered like for like growth of 3.0% despite difficult comparatives. Trading in LEGOLAND Parks has however been more disappointing. Although we enjoyed a strong Easter and Spring Break performance, trading since then has been affected by poor weather in May and June, difficult market conditions in a number of countries and limited momentum from ‘The LEGO Movie 2’. With eight new Midway attractions opened in the period, 372 new accommodation rooms, and the ongoing development of new LEGOLAND parks, we continue to build on our position as a unique, multi-format international operator of strongly branded and IP-led location based entertainment.” Delivering on the strategy The Group has made further progress against its strategic growth drivers so far in 2019, and has also expanded and diversified its portfolio: Growing the existing estate through planned investment cycles • Compelling new propositions opened across the estate, including: o Midway Attractions – ’Broadway’ experience at Madame Tussauds New York and ‘Penguin Ice Adventure’ at SEA LIFE Bangkok Ocean World o LEGOLAND Parks – ‘The LEGO Movie World’ at LEGOLAND Florida and ‘The Haunted House Monster Party’ at LEGOLAND Windsor o Resort Theme Parks – ‘Colossos’ roller coaster at Heide Park. Exploiting strategic synergies • Productivity Agenda on track to deliver £35 million of efficiency savings by 2022 o UK-based finance Shared Service Centre to open next month o A number of central functions rationalised o Continued pilot of ‘lean’ practices in our theme parks • Successful launch of Merlin Monthly Membership programme, now accounting for approximately 30% of all UK-wide Pass sales. Transforming our theme parks into destination resorts • Total of 372 new rooms planned for 2019 now open, comprising: o 142 room Castle Hotel at LEGOLAND Billund Resort o 128 room Magic Hotel at Gardaland Resort o 102 ‘Stargazing Pods’ at Alton Towers Resort. Rolling out new Midway attractions • Eight new Midway attractions opened to date, including two pilots of the new Peppa Pig World of Play in the US, and a Dungeon within Alton Towers Resort • SEA LIFE San Antonio scheduled to open towards the end of 2019. New LEGOLAND park developments • Continue to target a 2020 opening for LEGOLAND New York, although timetable and cost are under pressure given the scale and complexity of the project o Accommodation is now expected to open in 2021 2 • Construction contracts now awarded in South Korea, scheduled to open by 2022 • Discussions ongoing regarding development agreements in China. Recommended Offer Merlin announced on 28 June a Recommended Offer for the Company. Documents related to the shareholder and court meetings, which are expected to take place on 3 September, will be published today on the Company’s corporate website. Dividend Following the announcement made on 28 June regarding the Recommended Offer for the Company, the Board is not recommending an interim dividend payment. Footnotes to key highlights table: (1) Visitors represents all individual visits to Merlin owned or operated attractions. (2) Growth from like for like businesses and new business development at constant currency and excluding growth from acquisitions. Audio webcast An audio webcast for analysts, hosted by Anne-Francoise Nesmes, will be held this morning at 09:30 and can be accessed via Merlin’s corporate website, www.merlinentertainments.biz. Participant Dial in: +44 (0) 203059 5844 Participant Access Code: 306925 Contact details: For further information please contact: Investors Simon Whittington +44 (0)1202 493 011 Media James Crampton +44 (0)1202 493 014 Brunswick Fiona Micallef-Eynaud / Daniel Holgersson +44 (0)20 7404 5959 3 About Merlin Entertainments plc Merlin Entertainments plc is a global leader in location based, family entertainment. As Europe's Number 1 and the world's second-largest visitor attraction operator, Merlin now operates over 130 attractions, 20 hotels and 6 holiday villages in 25 countries and across 4 continents. Merlin’s purpose is to deliver memorable experiences to 67 million guests around the world, through its iconic global and local brands, and the commitment and passion of its c.28,000 employees (peak season). The Company invests in the development of outstanding visitor experiences across multiple formats, and consistently achieves above 90% guest satisfaction levels. It is headquartered in Poole, Dorset, UK and is listed on the London Stock Exchange (MERL.L). In 2018, Merlin had revenues of £1.7 billion and underlying EBITDA of £494 million. Reflecting its longstanding strategy of diversification and global expansion, Merlin generates over 70% of profits from outside of the UK. Merlin’s strategy since its inception in 1999 has been to create a high growth, high return family entertainment company based upon strong brands and a global portfolio that is naturally balanced against the impact of external factors. It operates two distinct products – Midway attractions and theme parks. ‘Midway’ attractions are high quality, branded, indoor attractions, with a typical 1-2 hour dwell time, located in city centres, shopping malls or resorts. There are approximately 120 Midway attractions across 22 countries, with chainable brands including SEA LIFE, Madame Tussauds, The Eye (observation attractions), The Dungeons and LEGOLAND Discovery Centres. Midway also incorporates the Little BIG City brand which has attractions in Berlin and Beijing, and two new brand concepts: The Bear Grylls Adventure which opened its first attraction last year in Birmingham, UK, and Peppa Pig World of Play, a pre-school play experience with initial roll out in China and the US. Merlin’s theme parks are larger multi-day outdoor resort destinations, incorporating on-site themed accommodation. These are organised into two specific Operating Groups, based on the brands. • LEGOLAND Parks – Eight LEGO themed interactive theme parks appealing to younger families with children aged 2-12. The LEGOLAND Parks estate spans seven countries across three continents, with plans already announced for further parks in New York, US and South Korea and discussions ongoing regarding parks in China. • Resort Theme Parks – Six nationally recognised destination theme parks arranged around a central theme. Resort Theme Parks include Alton Towers, THORPE PARK, Chessington World of Adventures, Warwick Castle in the UK, and Gardaland (Italy) and Heide Park (Northern Germany). The trend towards shorter, more frequent breaks has supported the growth of Merlin’s themed on-site accommodation within its theme parks. Merlin has c.4,500 rooms across a variety of accommodation formats and price points, including four- star hotels, lodges and glamping.